The recent India-UK trade agreement has shifted focus back to another lingering conversation — the trade deal between India and the United States. With August 1 approaching fast, and with it the threat of new US tariffs, the spotlight is back on whether the two sides can finally close a deal. President Donald Trump has called the deal “very near”. Commerce Minister Piyush Goyal says negotiations are making “fantastic” progress. However, market watchers firmly believe that a mini or an interim trade deal is unlikely in the next few days.
In contrast, Trump has signed pacts with more than a handful of countries, including Japan, Vietnam, Indonesia, and the Philippines, in the past few days, besides dispatching tariff letters to over 20 more with effective rates from August. However, India isn’t in a hurry, and as Goyal mentioned, negotiations are rarely successful when constrained by timelines.
The delay in the India-US deal comes down to real differences. One is America’s push for deeper access into India’s farming and dairy sectors. India isn’t ready to make those concessions, knowing their local impact could be serious. On the other hand, India has asked the US to ease duties on steel, aluminium and car exports — a request that remains on the table.
Moreover, India’s role in global groups like BRICS, and its ongoing energy ties with Russia, may be unsettling for the US. It is threatening 500 percent tariffs on imports from Russia, particularly oil. There’s also the thorny issue of data localisation rules, which the US wants India to relax, besides seeking superior digital market access for American tech firms. India is taking a cautious view.
In the absence of an interim deal, it’s unclear whether India will face higher tariffs from August or if Trump will extend the deadline once more. The recent American deals demonstrate how the US exerts pressure on countries to roll out the red carpet for American products or commit significant investments in the US in exchange for lower duties. India isn’t ready to cede ground and is clear about protecting labour-sensitive sectors, such as agriculture and textiles. Given India’s significant trade deficit with the US, chances are that the US may ultimately gain sector-specific advantages; however, on balance, the proposed deal must ensure equity for both sides.